Be honest with yourself and others (i.e. don’t just say what you think others want to hear). Work hard on a problem to reveal its secrets. Failure is an essential part of the innovation process — but make only new mistakes.
This is the advice that businessman and investor Ben Horowitz shared with students last week in a fireside chat with Professor Mike Franklin, the Thomas M. Siebel Chair of Computer Science and director of the AMPlab at UC Berkeley. Horowitz was interviewed as part of the A. Richard Newton Series which brings distinguished innovators from around the world to Berkeley to share their successes and failures with students.
Horowitz brought a unique perspective as co-founder of Andreessen Horowitz, one of the valley’s top venture capital firms with a portfolio of investments that includes Facebook, Twitter, 500px, Foursquare, BuzzFeed, Groupon, Lyft, Oculus VR, and many more. Starting with an initial investment of $300 million in 2009, Horowitz and partner Marc Andreessen’s firm is currently valued at an estimated $4 billion.
So how did Horowitz become one of the most successful venture capitalists in history?
Horowitz, a Berkeley native (and Berkeley High School alum), left the Bay Area to attend university at Columbia where he was shocked by how different New York was. “You really want to fit in, particularly if you go to a college like I did where I didn’t have any friends and was from a weird hippie town. So, I show up there, and I really want to make friends, but you have to be careful because your friends in college are… kind of stupid.”
Horowitz’s friends helped him learn his first life lesson: to trust himself and not always try to please others. After attending a computer science class, he was inspired by the English mathematician Alan Turing and his idea of ‘Turing completeness’ — the basic idea that a general purpose computing machine could simulate all kinds of machines without having to build a different machine for every single purpose — an idea that paved the way for how we use computers today, “Even though Alan Turing was 40 years before then, I was reading about this guy going, Wow, this guy has a secret that is going to happen to the world that nobody knows about but me. That’s awesome, I’m going to major in computer science.”
But at the time, computer science wasn’t as respected as it is today, so when Horowitz told his friends that he was planning to study CS, they teased him. Inspired by Turing’s secret, he knew he needed to trust himself, “Even though I really wanted them to like me because they were my friends, I wasn’t going to listen to them. That little lesson was the key to everything else that I think happened to me in my life, because every time you have a breakthrough idea, a really innovative idea, by definition it’s going to look like a stupid idea. If it looked like a good idea, it wouldn’t be innovative, it would be something that everyone else already knew and would be obvious.”
So, in spite of his friends, Horowitz studied CS at Columbia and eventually received a Master’s degree from UCLA where he worked under Professor Leonard Kleinrock, who is credited as a pioneer in the invention of the internet for his contribution of packet-switching.
After UCLA, Horowitz worked for the Lotus Development Corporation helping to develop LotusNotes, until he heard of something called Mosaic. “What LotusNotes was doing in the most complex way imaginable, Mosaic was doing in a completely open and simple way, and I thought — this is the future, and I’ve got to go. So, I applied at a company called Netscape.”
Again, Horowitz’s ability to act on seeing the next big secret was uncanny. Mosaic, the first modern web browser, is credited by many for popularizing the World Wide Web. It later changed its name to Netscape and launched Netscape Navigator. (Incidentally, Mosiac’s code was licensed to Microsoft who used it to create the first Internet Explorer — which started the so-called ‘browser-wars’ of the 1990’s.)
While Horowitz was undoubtedly shrewd in his ability to recognize the potential of the browser, what he (may not) have anticipated when going to Netscape was that there he would meet his future partner, Marc Andreessen. Andreessen (who was just twenty-four at the time) was co-author of the Mosaic browser and co-founder of Netscape. During the talk, Horowitz lauded Andreessen’s intelligence, “I swear to this day that the reason that Marc invented the browser was that in those days, there just wasn’t enough for him to read.”
Expanding on his earlier lesson to trust himself, Horowitz shared what he believes to be one of the most important skills anyone can have — honesty. “[One] thing that is very hard is honesty. That means honesty with other people and honesty with yourself. The truth is, there is not a naturally honest person in the world. Nobody really is, it’s something you have to work at. And the reason you have to work at it goes back to that you really want to feel good about yourself, and you want people to like you. And the way to get people to like you is to tell them what they want to hear — not the truth — you tell them what they want to hear. That’s one of the biggest challenges if you want to lead an organization or do something important. You can’t lie to other people or lie to yourself. If you do, they will see through it. You might think you are being slick — but they see through it.”
“Telling the truth is work. The next time you say the thing that makes you feel better — you need to check yourself and try to be honest. If you learn to do that, that’s actually an amazing skill.”
Horowitz went on to share some of the mistakes that he has made in the past. He discussed an early $30 million mistake when he expanded the office space of he and Andreessen’s early company Loudcloud, one of the first companies to talk about cloud-computing and software as a service, which later became Opsware (a company sold to HP for $1.6 billion in 2006). Horowitz had expanded the space in 1999 right before the dotcom crash which reduced his $30 million investment tenfold.
“If you try to do something really hard, you’re going to make mistakes. Entrepreneurship is very much like scientific discovery. If you read about many of the great scientific discoveries, they almost never found what they were looking for… you rarely end up doing what you set out to do. By definition, the whole endeavor is a big mistake.”
Horowitz elucidated by telling the story of Stewart Butterfield, the entrepreneur who created Flickr, the popular photo sharing app. Flickr was not conceived of as a photo-sharing application but was originally part of a massive online multi-player game called Game Neverending (the Flickr part was a photo uploader for the game’s avatar).
Later, in 2009, Horowitz invested in Butterfield’s new game called Glitch. Unfortunately, the game was created with Flash (a technology that Steve Jobs announced in 2010 that Apple would not support on its extremely popular iOS devices which were already transforming the way games were being played) and did not catch on.
So, when the game looked as if it would fail, Horowitz received a call from Butterfield, “Ben, I’ve got $6 million left. I have no way to raise money to solve the issues, and it will cost more than $6 million to finish the game. So, I’ve got like three choices: pray for rain and try to finish, I could shut down the company and give you your $6 million back — or we built this tool that we use in our engineering team to communicate with each other and make engineering work a little better, and we could put that out as a product.” While skeptical of completely pivoting Butterfield’s venture — from a video game to enterprise software — Horowitz told Butterfield to go for it.
And it paid off. The team messaging app that Butterfield developed to help his engineering team communicate was called Slack, a company that in 2015 was valued at $2.76 billion — and an endeavor that started as a total mistake.
“A lot of the process is, you have a secret, something that no one else knows. Because [Butterfield] was like pulling his hair out, literally smoking eight packs of cigarettes a day, he was doing everything he could do optimize development. So, he learned where software development was sub-optimal. He discovered a secret in the process of trying to build a game, and it was that secret that led to the company. And that is a really big key. You have to go do something really hard if you want to learn something about the world. And it’s not that nobody else knows it, but almost nobody else knows it. Nobody who does know it, is acting on it. And that’s when you have a breakthrough. That’s when you have something you can build a company around, that’s when you have something that you can build something really important around. But it starts with hard work.”
Many lessons can be drawn from Ben’s unconventional approach to investing. As someone who has led Silicon Valley’s greatest startups and influenced the impact computing and media has had on our lives, Ben’s vision for the future, and his approach to investing serve as an example to all entrepreneurs striving to make it in the tech world. His greatest asset though, remains his passion for hard work and honesty.
‘Stay strong in the struggle,’ Ben wrote on everyone’s books, as he passed on wisdom and inspired students after his talk.